my plan to adjust SQP

[tonyk]

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

That's essentially impossible IMO, because you'd have to walk the book down in *all* markets to generate a significant impact on the price feed, and if you're that powerful the market is in your hands anyway.

Why all markets?  Am I missing something?  Black swans are based on internal market trading, not the price feed, is it not?  I'll admit I'm wrong if I'm misunderstanding how this market works.  The price feed is only used for the SQP [aka BSP (black swan protection)] is it not?

[In the equation: SWAN = DEBT/COLLATERAL
https://bitsharestalk.org/index.php/topic,19102.0.html

Both DEBT & COLLATERAL are based on internal market prices correct?]

I checked the market depth on the openledger books and a 430,000 BTS sell order ($1290) gets the market down from .003 USD/BTS to .002 USD/BTS.. if my math is right it only takes $1,290 to bring the internal markets down 33%?  And there is no support after that so it will go to zero USD/BTS if no one else comes in the very second a big sell order is placed.

I'm actually hoping I'm missing something, because I'm doing this analysis on the fly and the more I find out the more problems I see with this illiquidity....

IDK, shouldn't you have found this first before having strong opinions in the other thread? ...to say nothing about this one.

I have an opinion and I'm asking mainly rhetorically, but I hold out that I could be wrong and if so sometimes it's easier for someone to point it out.

yes you are wrong - as in "it is not up to you to decide who is running a real business". And I might be wrong but real businesses do not complain for losing 20 BTS.

[merivercap]

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

That's essentially impossible IMO, because you'd have to walk the book down in *all* markets to generate a significant impact on the price feed, and if you're that powerful the market is in your hands anyway.

Why all markets?  Am I missing something?  Black swans are based on internal market trading, not the price feed, is it not?  I'll admit I'm wrong if I'm misunderstanding how this market works.  The price feed is only used for the SQP [aka BSP (black swan protection)] is it not?

[In the equation: SWAN = DEBT/COLLATERAL
https://bitsharestalk.org/index.php/topic,19102.0.html

Both DEBT & COLLATERAL are based on internal market prices correct?]

I checked the market depth on the openledger books and a 430,000 BTS sell order ($1290) gets the market down from .003 USD/BTS to .002 USD/BTS.. if my math is right it only takes $1,290 to bring the internal markets down 33%?  And there is no support after that so it will go to zero USD/BTS if no one else comes in the very second a big sell order is placed.

I'm actually hoping I'm missing something, because I'm doing this analysis on the fly and the more I find out the more problems I see with this illiquidity....

IDK, shouldn't you have found this first before having strong opinions in the other thread? ...to say nothing about this one.

I have an opinion and I'm asking mainly rhetorically, but I hold out that I could be wrong and if so sometimes it's easier for someone to point it out.

[tonyk]

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

That's essentially impossible IMO, because you'd have to walk the book down in *all* markets to generate a significant impact on the price feed, and if you're that powerful the market is in your hands anyway.

Why all markets?  Am I missing something?  Black swans are based on internal market trading, not the price feed, is it not?  I'll admit I'm wrong if I'm misunderstanding how this market works.  The price feed is only used for the SQP [aka BSP (black swan protection)] is it not?

[In the equation: SWAN = DEBT/COLLATERAL
https://bitsharestalk.org/index.php/topic,19102.0.html

Both DEBT & COLLATERAL are based on internal market prices correct?]

I checked the market depth on the openledger books and a 430,000 BTS sell order ($1290) gets the market down from .003 USD/BTS to .002 USD/BTS.. if my math is right it only takes $1,290 to bring the internal markets down 33%?  And there is no support after that so it will go to zero USD/BTS if no one else comes in the very second a big sell order is placed.

I'm actually hoping I'm missing something, because I'm doing this analysis on the fly and the more I find out the more problems I see with this illiquidity....

IDK, shouldn't you have found this first before having strong opinions in the other thread? ...to say nothing about this one.

[merivercap]

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

That's essentially impossible IMO, because you'd have to walk the book down in *all* markets to generate a significant impact on the price feed, and if you're that powerful the market is in your hands anyway.

Why all markets?  Am I missing something?  Black swans are based on internal market trading, not the price feed, is it not?  I'll admit I'm wrong if I'm misunderstanding how this market works.  The price feed is only used for the SQP [aka BSP (black swan protection)] is it not?

[In the equation: SWAN = DEBT/COLLATERAL
https://bitsharestalk.org/index.php/topic,19102.0.html

Both DEBT & COLLATERAL are based on internal market prices correct?]

I checked the market depth on the openledger books and a 430,000 BTS sell order ($1290) gets the market down from .003 USD/BTS to .002 USD/BTS.. if my math is right it only takes $1,290 to bring the internal markets down 33%?  And there is no support after that so it will go to zero USD/BTS if no one else comes in the very second a big sell order is placed.

I'm actually hoping I'm missing something, because I'm doing this analysis on the fly and the more I find out the more problems I see with this illiquidity....

[pc]

Lets stop theorizing about how pegged currencies should be conceived. Nubits is an example that works in practice. Theres no SQP, and theres no forced settlement. These features merely over-complicate the market and discourage the very people we need to make bitassets work.

IMO Nubits is an example that seems to work for a while but still is doomed from the start. I'm sure nobody here would argue that we should invent a BitShares-3.0 that is essentially a Nubits clone.

Bitshares is useless if bitassets don't work. Its really that simple.

I fully agree.

The problem is that there's a lot of theories how bitassets are supposed to work, but so far nobody (including BM) seems to really have nailed it. (That sentence sucks somehow, I hope you get what I mean.)

IMO what's happening here wrt SQP is that some people have entered short positions, fully aware of the risk, and fully aware of the rules, and due to the BTS bear market they're now in the danger of losing money. So they're now complaing and demanding that the rules be changed. That's not only lame, it's outright dangerous because by changing the rules they're putting the whole MPA system at risk.

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

That's essentially impossible IMO, because you'd have to walk the book down in *all* markets to generate a significant impact on the price feed, and if you're that powerful the market is in your hands anyway.

And you didn't answer why a 10% reduction would be that big a deal for margin overhang. Compare that to the upside where you're going to get much more liquidity in the market, create thinner spreads,  and further lessen the chances of black swans. 

You're playing with numbers. It's not a 10% reduction, it reduces the "punishment" to (near-)zero, which is a 100% reduction.
And the upside you're quoting is obviously purely speculative.

Lastly you seem to be in favor of forced settlement.

No I'm not. I think forced settlements can be used for market manipulation, and I have voiced that opinion when the idea was discussed 6 months ago. But the market manipulation I was afraid of back then has nothing to do with the situation discussed in the other current thread.

[merivercap]

1) The SQP was designed to protect shorts, but in actuality it protects manipulators from ramming down market prices and forcing a black swan.  On occasion I will call the SQP the BSP (Black Swan Protector) as a meme until someone convinces me otherwise.   
2) Isn't the SQP already at 1100 or 10%?  Do you think changing it another 10% is really going to make that much of a difference in creating a black swan?  Really how much of an unmargin-called overhang will we have?  It would be great for someone to calculate it.   Anyways with more liquidity I argue we'll have less of an overhang and thinner spreads.
3) The upside of setting SQP  to 1000 will get you more liquidity.. more shorters...most likely make the premium disappear... make bitUSD & bitShares relevant.... help it become adopted worldwide.  and end world hunger...
4) Buyers are bidding at the SQP so whatever it's set at pegs the price.  When margin calls happen at the price feed, people will trade around the price feed which is great. 
5) Setting the SQP removes the confusion and implicit agreement between shorts and longs about an agreed upon settlement price for the trade.  The whole 'settlement price' is confusing.  Natural settlement should occur at that price feed, not forced settlement.  We should change the SQP and remove forced settlement...

What you're missing is that the SQP is only relevant for shorts with insufficient collateral. These shorts are dangerous and therefore must be removed from the books as quickly as possible. The shorters can escape the effects of the SQP simply by adding more collateral. If they don't - well, you can call it punishment if you like.

I fully understand it's for those with 'insufficient' collateral, but did you understand my post about walking the book down in an illiquid market and why it's more likely to prevent a black swan than cause it?   

And you didn't answer why a 10% reduction would be that big a deal for margin overhang. Compare that to the upside where you're going to get much more liquidity in the market, create thinner spreads,  and further lessen the chances of black swans. 

Lastly you seem to be in favor of forced settlement.  Do you know that it doesn't matter how much collateral you have and you can be force settled?  You'll have a race to be the most collateralized...  do you know what that does to liquidity?  If I have 3x collateral and I'm the least collateralized I may have to go to 4x collateral so I'm not at the bottom.. then the bottom guy will have to go to 5x collateral...  and the race can go so far to have no one creating bitAssets so what is the point? 

[clout]

1) The SQP was designed to protect shorts, but in actuality it protects manipulators from ramming down market prices and forcing a black swan.  On occasion I will call the SQP the BSP (Black Swan Protector) as a meme until someone convinces me otherwise.   
2) Isn't the SQP already at 1100 or 10%?  Do you think changing it another 10% is really going to make that much of a difference in creating a black swan?  Really how much of an unmargin-called overhang will we have?  It would be great for someone to calculate it.   Anyways with more liquidity I argue we'll have less of an overhang and thinner spreads.
3) The upside of setting SQP  to 1000 will get you more liquidity.. more shorters...most likely make the premium disappear... make bitUSD & bitShares relevant.... help it become adopted worldwide.  and end world hunger...
4) Buyers are bidding at the SQP so whatever it's set at pegs the price.  When margin calls happen at the price feed, people will trade around the price feed which is great. 
5) Setting the SQP removes the confusion and implicit agreement between shorts and longs about an agreed upon settlement price for the trade.  The whole 'settlement price' is confusing.  Natural settlement should occur at that price feed, not forced settlement.  We should change the SQP and remove forced settlement...

What you're missing is that the SQP is only relevant for shorts with insufficient collateral. These shorts are dangerous and therefore must be removed from the books as quickly as possible. The shorters can escape the effects of the SQP simply by adding more collateral. If they don't - well, you can call it punishment if you like.

What you are missing is that there is no reason for speculators to get involved in bitshares trading. Its over complicated and too risky. If I want to margin trade I'm just going to do so on Poloniex.

The reason for the higher SQP and forced settlement is to protect against illiquid markets. The problem is that these features only further reduce liquidity. Its a catch 22. You can't protect against illiquid markets and a falling BTS price through software hacks. You have to incentivize liquidity, you have to give confidence to the market. Neither of which is being done.

Lets stop theorizing about how pegged currencies should be conceived. Nubits is an example that works in practice. Theres no SQP, and theres no forced settlement. These features merely over-complicate the market and discourage the very people we need to make bitassets work.

Bitshares is useless if bitassets don't work. Its really that simple.

[pc]

1) The SQP was designed to protect shorts, but in actuality it protects manipulators from ramming down market prices and forcing a black swan.  On occasion I will call the SQP the BSP (Black Swan Protector) as a meme until someone convinces me otherwise.   
2) Isn't the SQP already at 1100 or 10%?  Do you think changing it another 10% is really going to make that much of a difference in creating a black swan?  Really how much of an unmargin-called overhang will we have?  It would be great for someone to calculate it.   Anyways with more liquidity I argue we'll have less of an overhang and thinner spreads.
3) The upside of setting SQP  to 1000 will get you more liquidity.. more shorters...most likely make the premium disappear... make bitUSD & bitShares relevant.... help it become adopted worldwide.  and end world hunger...
4) Buyers are bidding at the SQP so whatever it's set at pegs the price.  When margin calls happen at the price feed, people will trade around the price feed which is great. 
5) Setting the SQP removes the confusion and implicit agreement between shorts and longs about an agreed upon settlement price for the trade.  The whole 'settlement price' is confusing.  Natural settlement should occur at that price feed, not forced settlement.  We should change the SQP and remove forced settlement...

What you're missing is that the SQP is only relevant for shorts with insufficient collateral. These shorts are dangerous and therefore must be removed from the books as quickly as possible. The shorters can escape the effects of the SQP simply by adding more collateral. If they don't - well, you can call it punishment if you like.

[clout]

I don't think we should reduce it past 110 or 10%. I think in reducing it we are reducing the incentive for people to protect the network against a black swan. While I understand this can skew the price of the MPA by 10%, I dont think the problem is the SQP price but the fact that there no one is willing to sell MPA for 10% profit.

The SQP affects only margin calls, so as long as the shorters keep their positions sufficiently collateralized there is no problem.
The purpose of the SQP is to protect the MPA from a black swan. Reducing the SQP increases the likelyhood of a black swan, which would cause serious damage to our ecosystem.
Conclusion: don't reduce the SQP!

@pc @lafona  I listened to the mumble recording, but I wish I could have attended live and spoken up.  I understand the concern about black swans,  but black swans are more likely to occur with less liquidity and without the SQP we may have black swanned already if someone just walked the book enough to trigger it. 

1) The SQP was designed to protect shorts, but in actuality it protects manipulators from ramming down market prices and forcing a black swan.  On occasion I will call the SQP the BSP (Black Swan Protector) as a meme until someone convinces me otherwise.   
2) Isn't the SQP already at 1100 or 10%?  Do you think changing it another 10% is really going to make that much of a difference in creating a black swan?  Really how much of an unmargin-called overhang will we have?  It would be great for someone to calculate it.   Anyways with more liquidity I argue we'll have less of an overhang and thinner spreads.
3) The upside of setting SQP  to 1000 will get you more liquidity.. more shorters...most likely make the premium disappear... make bitUSD & bitShares relevant.... help it become adopted worldwide.  and end world hunger...
4) Buyers are bidding at the SQP so whatever it's set at pegs the price.  When margin calls happen at the price feed, people will trade around the price feed which is great. 
5) Setting the SQP removes the confusion and implicit agreement between shorts and longs about an agreed upon settlement price for the trade.  The whole 'settlement price' is confusing.  Natural settlement should occur at that price feed, not forced settlement.  We should change the SQP and remove forced settlement...

Finally, someone that actually gets that the supposed benefits are far less than the costs. The market worked far better when these features were not added.

[merivercap]

I don't think we should reduce it past 110 or 10%. I think in reducing it we are reducing the incentive for people to protect the network against a black swan. While I understand this can skew the price of the MPA by 10%, I dont think the problem is the SQP price but the fact that there no one is willing to sell MPA for 10% profit.

The SQP affects only margin calls, so as long as the shorters keep their positions sufficiently collateralized there is no problem.
The purpose of the SQP is to protect the MPA from a black swan. Reducing the SQP increases the likelyhood of a black swan, which would cause serious damage to our ecosystem.
Conclusion: don't reduce the SQP!

@pc @lafona  I listened to the mumble recording, but I wish I could have attended live and spoken up.  I understand the concern about black swans,  but black swans are more likely to occur with less liquidity and without the SQP we may have black swanned already if someone just walked the book enough to trigger it. 

1) The SQP was designed to protect shorts, but in actuality it protects manipulators from ramming down market prices and forcing a black swan.  On occasion I will call the SQP the BSP (Black Swan Protector) as a meme until someone convinces me otherwise.   
2) Isn't the SQP already at 1100 or 10%?  Do you think changing it another 10% is really going to make that much of a difference in creating a black swan?  Really how much of an unmargin-called overhang will we have?  It would be great for someone to calculate it.   Anyways with more liquidity I argue we'll have less of an overhang and thinner spreads.
3) The upside of setting SQP  to 1000 will get you more liquidity.. more shorters...most likely make the premium disappear... make bitUSD & bitShares relevant.... help it become adopted worldwide.  and end world hunger...
4) Buyers are bidding at the SQP so whatever it's set at pegs the price.  When margin calls happen at the price feed, people will trade around the price feed which is great. 
5) Setting the SQP removes the confusion and implicit agreement between shorts and longs about an agreed upon settlement price for the trade.  The whole 'settlement price' is confusing.  Natural settlement should occur at that price feed, not forced settlement.  We should change the SQP and remove forced settlement... 

[btstip]

Hey Tuck Fheman, here are the results of your tips...

• tonyk: has been credited 5 PERCENT

Curious about BtsTip? Visit us at http://sharebits.io and start tipping BTS on https://bitsharestalk.org/ today!

Source: https://bitsharestalk.org/index.php/topic,20214.msg261448/topicseen.html#msg261448

Created by hybridd

[Tuck Fheman]

You're doing it wrong!

#sharebits "tonyk" 5 PERCENT

[tonyk]

I don't think we should reduce it past 110 or 10%. I think in reducing it we are reducing the incentive for people to protect the network against a black swan. While I understand this can skew the price of the MPA by 10%, I dont think the problem is the SQP price but the fact that there no one is willing to sell MPA for 10% profit.

The SQP affects only margin calls, so as long as the shorters keep their positions sufficiently collateralized there is no problem.
The purpose of the SQP is to protect the MPA from a black swan. Reducing the SQP increases the likelyhood of a black swan, which would cause serious damage to our ecosystem.
Conclusion: don't reduce the SQP!

You guys never stop to amuse me.
The fact that you are all coders, and so no doubt very smart...so you believe you know everything and can give expert opinion on every single thing you come across.

 

[pc]

I don't think we should reduce it past 110 or 10%. I think in reducing it we are reducing the incentive for people to protect the network against a black swan. While I understand this can skew the price of the MPA by 10%, I dont think the problem is the SQP price but the fact that there no one is willing to sell MPA for 10% profit.

The SQP affects only margin calls, so as long as the shorters keep their positions sufficiently collateralized there is no problem.
The purpose of the SQP is to protect the MPA from a black swan. Reducing the SQP increases the likelyhood of a black swan, which would cause serious damage to our ecosystem.
Conclusion: don't reduce the SQP!

[iHashFury]

Have a listen to beyond bitcoin recording for 20151127.

SQP is discussed in detail